7. G.R. No.
179419               January 12, 2011 Certification of Non- Recovery issued by the PNP
DURBAN APARTMENTS CORPORATION, doing
business under the name and style of City
Garden Hotel, Petitioner,
vs.
PIONEER INSURANCE AND SURETY
CORPORATION, Respondent.
DECISION
NACHURA, J.:
For review is the Decision 1 of the Court of Appeals
(CA) in CA-G.R. CV No. 86869, which affirmed the
decision2 of the Regional Trial Court (RTC), Branch
66, Makati City, in Civil Case No. 03-857, holding
petitioner Durban Apartments Corporation solely
liable to respondent Pioneer Insurance and Surety
Corporation for the loss of Jeffrey See’s (See’s)
vehicle.
The facts, as found by the CA, are simple.
On July 22, 2003, [respondent] Pioneer Insurance and
Surety Corporation x x x, by right of subrogation,
filed [with the RTC of Makati City] a Complaint for
Recovery of Damages against [petitioner] Durban
Apartments Corporation, doing business under the
name and style of City Garden Hotel, and [defendant
before the RTC] Vicente Justimbaste x x x.
[Respondent averred] that: it is the insurer for loss
and damage of Jeffrey S. See’s [the insured’s] 2001
Suzuki Grand Vitara x x x with Plate No. XBH-510
under Policy No. MC-CV-HO-01-0003846-00-D in the
amount of ₱1,175,000.00; on April 30, 2002, See
arrived and checked in at the City Garden Hotel in
Makati corner Kalayaan Avenues, Makati City before
midnight, and its parking attendant, defendant x x x
Justimbaste got the key to said Vitara from See to
park it[. O]n May 1, 2002, at about 1:00 o’clock in the
morning, See was awakened in his room by [a]
telephone call from the Hotel Chief Security Officer
who informed him that his Vitara was carnapped
while it was parked unattended at the parking area
of Equitable PCI Bank along Makati Avenue between
the hours of 12:00 [a.m.] and 1:00 [a.m.]; See went
to see the Hotel Chief Security Officer, thereafter
reported the incident to the Operations Division of
the Makati City Police Anti-Carnapping Unit, and a
flash alarm was issued; the Makati City Police Anti-
Carnapping Unit investigated Hotel Security Officer,
Ernesto T. Horlador, Jr. x x x and defendant x x x
Justimbaste; See gave his Sinumpaang Salaysay to
the police investigator, and filed a Complaint Sheet
with the PNP Traffic Management Group in Camp
Crame, Quezon City; the Vitara has not yet been
recovered since July 23, 2002 as evidenced by a
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TMG; it paid the ₱1,163,250.00 money claim of See
and mortgagee ABN AMRO Savings Bank, Inc. as
indemnity for the loss of the Vitara; the Vitara was
lost due to the negligence of [petitioner] Durban
Apartments and [defendant] Justimbaste because it
was discovered during the investigation that this was
the second time that a similar incident of carnapping
happened in the valet parking service of [petitioner]
Durban Apartments and no necessary precautions
were taken to prevent its repetition; [petitioner]
Durban Apartments was wanting in due diligence in
the selection and supervision of its employees
particularly defendant x x x Justimbaste; and
defendant x x x Justimbaste and [petitioner] Durban
Apartments failed and refused to pay its valid, just,
and lawful claim despite written demands.
Upon service of Summons, [petitioner] Durban
Apartments and [defendant] Justimbaste filed their
Answer with Compulsory Counterclaim alleging that:
See did not check in at its hotel, on the contrary, he
was a guest of a certain Ching Montero x x x;
defendant x x x Justimbaste did not get the ignition
key of See’s Vitara, on the contrary, it was See who
requested a parking attendant to park the Vitara at
any available parking space, and it was parked at the
Equitable Bank parking area, which was within See’s
view, while he and Montero were waiting in front of
the hotel; they made a written denial of the demand
of [respondent] Pioneer Insurance for want of legal
basis; valet parking services are provided by the
hotel for the convenience of its customers looking for
a parking space near the hotel premises; it is a
special privilege that it gave to Montero and See; it
does not include responsibility for any losses or
damages to motor vehicles and its accessories in the
parking area; and the same holds true even if it was
See himself who parked his Vitara within the
premises of the hotel as evidenced by the valet
parking customer’s claim stub issued to him; the
carnapper was able to open the Vitara without using
the key given earlier to the parking attendant and
subsequently turned over to See after the Vitara was
stolen; defendant x x x Justimbaste saw the Vitara
speeding away from the place where it was parked;
he tried to run after it, and blocked its possible path
but to no avail; and See was duly and immediately
informed of the carnapping of his Vitara; the matter
was reported to the nearest police precinct; and
defendant x x x Justimbaste, and Horlador submitted
themselves to police investigation.
During the pre-trial conference on November 28,
2003, counsel for [respondent] Pioneer Insurance
was present. Atty. Monina Lee x x x, counsel of
record of [petitioner] Durban Apartments and
Justimbaste was absent, instead, a certain Atty.
Nestor Mejia appeared for [petitioner] Durban
Apartments and Justimbaste, but did not file their
pre-trial brief.
On November 5, 2004, the lower court granted the
motion of [respondent] Pioneer Insurance, despite
the opposition of [petitioner] Durban Apartments and
Justimbaste, and allowed [respondent] Pioneer
Insurance to present its evidence ex parte before the
Branch Clerk of Court.
See testified that: on April 30, 2002, at about 11:30
in the evening, he drove his Vitara and stopped in
front of City Garden Hotel in Makati Avenue, Makati
City; a parking attendant, whom he had later known
to be defendant x x x Justimbaste, approached and
asked for his ignition key, told him that the latter
would park the Vitara for him in front of the hotel,
and issued him a valet parking customer’s claim
stub; he and Montero, thereafter, checked in at the
said hotel; on May 1, 2002, at around 1:00 in the
morning, the Hotel Security Officer whom he later
knew to be Horlador called his attention to the fact
that his Vitara was carnapped while it was parked at
the parking lot of Equitable PCI Bank which is in front
of the hotel; his Vitara was insured with [respondent]
Pioneer Insurance; he together with Horlador and
defendant x x x Justimbaste went to Precinct 19 of
the Makati City Police to report the carnapping
incident, and a police officer came accompanied
them to the Anti-Carnapping Unit of the said station
for investigation, taking of their sworn statements,
and flashing of a voice alarm; he likewise reported
the said incident in PNP TMG in Camp Crame where
another alarm was issued; he filed his claim with
[respondent] Pioneer Insurance, and a representative
of the latter, who is also an adjuster of Vesper
Insurance Adjusters-Appraisers [Vesper],
investigated the incident; and [respondent] Pioneer
Insurance required him to sign a Release of Claim
and Subrogation Receipt, and finally paid him the
sum of ₱1,163,250.00 for his claim.
Ricardo F. Red testified that: he is a claims evaluator
of [petitioner] Pioneer Insurance tasked, among
others, with the receipt of claims and documents
from the insured, investigation of the said claim,
inspection of damages, taking of pictures of insured
unit, and monitoring of the processing of the claim
until its payment; he monitored the processing of
See’s claim when the latter reported the incident to
[respondent] Pioneer Insurance; [respondent]
Pioneer Insurance assigned the case to Vesper who
verified See’s report, conducted an investigation,
obtained the necessary documents for the
processing of the claim, and tendered a settlement
check to See; they evaluated the case upon receipt
of the subrogation documents and the adjuster’s
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report, and eventually recommended for its
settlement for the sum of ₱1,163,250.00 which was
accepted by See; the matter was referred and
forwarded to their counsel, R.B. Sarajan &
Associates, who prepared and sent demand letters to
[petitioner] Durban Apartments and [defendant]
Justimbaste, who did not pay [respondent] Pioneer
Insurance notwithstanding their receipt of the
demand letters; and the services of R.B. Sarajan &
Associates were engaged, for ₱100,000.00 as
attorney’s fees plus ₱3,000.00 per court appearance,
to prosecute the claims of [respondent] Pioneer
Insurance against [petitioner] Durban Apartments
and Justimbaste before the lower court.
Ferdinand Cacnio testified that: he is an adjuster of
Vesper; [respondent] Pioneer Insurance assigned to
Vesper the investigation of See’s case, and he was
the one actually assigned to investigate it; he
conducted his investigation of the matter by
interviewing See, going to the City Garden Hotel,
required subrogation documents from See, and
verified the authenticity of the same; he learned that
it is the standard procedure of the said hotel as
regards its valet parking service to assist their guests
as soon as they get to the lobby entrance, park the
cars for their guests, and place the ignition keys in
their safety key box; considering that the hotel has
only twelve (12) available parking slots, it has an
agreement with Equitable PCI Bank permitting the
hotel to use the parking space of the bank at night;
he also learned that a Hyundai Starex van was
carnapped at the said place barely a month before
the occurrence of this incident because Liberty
Insurance assigned the said incident to Vespers, and
Horlador and defendant x x x Justimbaste admitted
the occurrence of the same in their sworn statements
before the Anti-Carnapping Unit of the Makati City
Police; upon verification with the PNP TMG [Unit] in
Camp Crame, he learned that See’s Vitara has not
yet been recovered; upon evaluation, Vesper
recommended to [respondent] Pioneer Insurance to
settle See’s claim for ₱1,045,750.00; See contested
the recommendation of Vesper by reasoning out that
the 10% depreciation should not be applied in this
case considering the fact that the Vitara was used for
barely eight (8) months prior to its loss; and
[respondent] Pioneer Insurance acceded to See’s
contention, tendered the sum of ₱1,163,250.00 as
settlement, the former accepted it, and signed a
release of claim and subrogation receipt.
The lower court denied the Motion to Admit Pre-Trial
Brief and Motion for Reconsideration field by
[petitioner] Durban Apartments and Justimbaste in its
Orders dated May 4, 2005 and October 20, 2005,
respectively, for being devoid of merit.3
Thereafter, on January 27, 2006, the RTC rendered a
decision, disposing, as follows:
WHEREFORE, judgment is hereby rendered ordering
[petitioner Durban Apartments Corporation] to pay
[respondent Pioneer Insurance and Surety
Corporation] the sum of ₱1,163,250.00 with legal
interest thereon from July 22, 2003 until the
obligation is fully paid and attorney’s fees and
litigation expenses amounting to ₱120,000.00.
SO ORDERED.4
On appeal, the appellate court affirmed the decision
of the trial court, viz.:
WHEREFORE, premises considered, the Decision
dated January 27, 2006 of the RTC, Branch 66,
Makati City in Civil Case No. 03-857 is hereby
AFFIRMED insofar as it holds [petitioner] Durban
Apartments Corporation solely liable to [respondent]
Pioneer Insurance and Surety Corporation for the loss
of Jeffrey See’s Suzuki Grand Vitara.
SO ORDERED.5
Hence, this recourse by petitioner.
The issues for our resolution are:
1. Whether the lower courts erred in declaring
petitioner as in default for failure to appear at the
pre-trial conference and to file a pre-trial brief;
2. Corollary thereto, whether the trial court correctly
allowed respondent to present evidence ex-parte;
3. Whether petitioner is liable to respondent for
attorney’s fees in the amount of ₱120,000.00; and
4. Ultimately, whether petitioner is liable to
respondent for the loss of See’s vehicle.
The petition must fail.
We are in complete accord with the common ruling
of the lower courts that petitioner was in default for
failure to appear at the pre-trial conference and to
file a pre-trial brief, and thus, correctly allowed
respondent to present evidence ex-parte. Likewise,
the lower courts did not err in holding petitioner
liable for the loss of See’s vehicle.
Well-entrenched in jurisprudence is the rule that
factual findings of the trial court, especially when
affirmed by the appellate court, are accorded the
highest degree of respect and are considered
conclusive between the parties. 6 A review of such
findings by this Court is not warranted except upon a
showing of highly meritorious circumstances, such
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as: (1) when the findings of a trial court are grounded
entirely on speculation, surmises, or conjectures; (2)
when a lower court’s inference from its factual
findings is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of
discretion in the appreciation of facts; (4) when the
findings of the appellate court go beyond the issues
of the case, or fail to notice certain relevant facts
which, if properly considered, will justify a different
conclusion; (5) when there is a misappreciation of
facts; (6) when the findings of fact are conclusions
without mention of the specific evidence on which
they are based, are premised on the absence of
evidence, or are contradicted by evidence on
record.7 None of the foregoing exceptions permitting
a reversal of the assailed decision exists in this
instance.
Petitioner urges us, however, that "strong [and]
compelling reason[s]" such as the prevention of
miscarriage of justice warrant a suspension of the
rules and excuse its and its counsel’s non-
appearance during the pre-trial conference and their
failure to file a pre-trial brief.
We are not persuaded.
Rule 18 of the Rules of Court leaves no room for
equivocation; appearance of parties and their
counsel at the pre-trial conference, along with the
filing of a corresponding pre-trial brief, is mandatory,
nay, their duty. Thus, Section 4 and Section 6 thereof
provide:
SEC. 4. Appearance of parties.–It shall be the duty of
the parties and their counsel to appear at the pre-
trial. The non-appearance of a party may be excused
only if a valid cause is shown therefor or if a
representative shall appear in his behalf fully
authorized in writing to enter into an amicable
settlement, to submit to alternative modes of dispute
resolution, and to enter into stipulations or
admissions of facts and documents.
SEC. 6. Pre-trial brief.–The parties shall file with the
court and serve on the adverse party, in such
manner as shall ensure their receipt thereof at least
three (3) days before the date of the pre-trial, their
respective pre-trial briefs which shall contain, among
others:
xxxx
Failure to file the pre-trial brief shall have the same
effect as failure to appear at the pre-trial.
Contrary to the foregoing rules, petitioner and its
counsel of record were not present at the scheduled
pre-trial conference. Worse, they did not file a pre-
trial brief. Their non-appearance cannot be excused
as Section 4, in relation to Section 6, allows only two
exceptions: (1) a valid excuse; and (2) appearance of
a representative on behalf of a party who is fully
authorized in writing to enter into an amicable
settlement, to submit to alternative modes of dispute
resolution, and to enter into stipulations or
admissions of facts and documents.
Petitioner is adamant and harps on the fact that
November 28, 2003 was merely the first scheduled
date for the pre-trial conference, and a certain Atty.
Mejia appeared on its behalf. However, its assertion
is belied by its own admission that, on said date, this
Atty. Mejia "did not have in his possession the
Special Power of Attorney issued by petitioner’s
Board of Directors."
As pointed out by the CA, petitioner, through Atty.
Lee, received the notice of pre-trial on October 27,
2003, thirty-two (32) days prior to the scheduled
conference. In that span of time, Atty. Lee, who was
charged with the duty of notifying petitioner of the
scheduled pre-trial conference,8 petitioner, and Atty.
Mejia should have discussed which lawyer would
appear at the pre-trial conference with petitioner,
armed with the appropriate authority therefor. Sadly,
petitioner failed to comply with not just one rule; it
also did not proffer a reason why it likewise failed to
file a pre-trial brief. In all, petitioner has not shown
any persuasive reason why it should be exempt from
abiding by the rules.
The appearance of Atty. Mejia at the pre-trial
conference, without a pre-trial brief and with only his
bare allegation that he is counsel for petitioner, was
correctly rejected by the trial court. Accordingly, the
trial court, as affirmed by the appellate court, did not
err in allowing respondent to present evidence ex-
parte.
Former Chief Justice Andres R. Narvasa’s words
continue to resonate, thus:
Everyone knows that a pre-trial in civil actions is
mandatory, and has been so since January 1, 1964.
Yet to this day its place in the scheme of things is not
fully appreciated, and it receives but perfunctory
treatment in many courts. Some courts consider it a
mere technicality, serving no useful purpose save
perhaps, occasionally to furnish ground for non-
suiting the plaintiff, or declaring a defendant in
default, or, wistfully, to bring about a compromise.
The pre-trial device is not thus put to full use. Hence,
it has failed in the main to accomplish the chief
objective for it: the simplification, abbreviation and
expedition of the trial, if not indeed its dispensation.
This is a great pity, because the objective is
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attainable, and with not much difficulty, if the device
were more intelligently and extensively handled.
xxxx
Consistently with the mandatory character of the
pre-trial, the Rules oblige not only the lawyers but
the parties as well to appear for this purpose before
the Court, and when a party "fails to appear at a pre-
trial conference (he) may be non-suited or
considered as in default." The obligation "to appear"
denotes not simply the personal appearance, or the
mere physical presentation by a party of one’s self,
but connotes as importantly, preparedness to go into
the different subject assigned by law to a pre-trial.
And in those instances where a party may not
himself be present at the pre-trial, and another
person substitutes for him, or his lawyer undertakes
to appear not only as an attorney but in substitution
of the client’s person, it is imperative for that
representative of the lawyer to have "special
authority" to make such substantive agreements as
only the client otherwise has capacity to make. That
"special authority" should ordinarily be in writing or
at the very least be "duly established by evidence
other than the self-serving assertion of counsel (or
the proclaimed representative) himself." Without that
special authority, the lawyer or representative
cannot be deemed capacitated to appear in place of
the party; hence, it will be considered that the latter
has failed to put in an appearance at all, and he
[must] therefore "be non-suited or considered as in
default," notwithstanding his lawyer’s or delegate’s
presence.9
We are not unmindful that defendant’s (petitioner’s)
preclusion from presenting evidence during trial does
not automatically result in a judgment in favor of
plaintiff (respondent). The plaintiff must still
substantiate the allegations in its
complaint.10 Otherwise, it would be inutile to continue
with the plaintiff’s presentation of evidence each
time the defendant is declared in default.
In this case, respondent substantiated the allegations
in its complaint, i.e., a contract of necessary deposit
existed between the insured See and petitioner. On
this score, we find no error in the following
disquisition of the appellate court:
[The] records also reveal that upon arrival at the City
Garden Hotel, See gave notice to the doorman and
parking attendant of the said hotel, x x x
Justimbaste, about his Vitara when he entrusted its
ignition key to the latter. x x x Justimbaste issued a
valet parking customer claim stub to See, parked the
Vitara at the Equitable PCI Bank parking area, and
placed the ignition key inside a safety key box while
See proceeded to the hotel lobby to check in. The
Equitable PCI Bank parking area became an annex of
City Garden Hotel when the management of the said
bank allowed the parking of the vehicles of hotel
guests thereat in the evening after banking hours.11
WHEREFORE, the petition is DENIED. The Decision of
the Court of Appeals in CA-G.R. CV No. 86869 is
AFFIRMED with the MODIFICATION that the award of
attorney’s fees is reduced to ₱60,000.00. Costs
against petitioner.

Article 1962, in relation to Article 1998, of the Civil SO ORDERED.

Code defines a contract of deposit and a necessary
deposit made by persons in hotels or inns: ANTONIO EDUARDO B. NACHURA
Associate Justice
Art. 1962. A deposit is constituted from the moment
a person receives a thing belonging to another, with WE CONCUR:
the obligation of safely keeping it and returning the
same. If the safekeeping of the thing delivered is not ANTONIO T. CARPIO
the principal purpose of the contract, there is no Associate Justice
deposit but some other contract. Chairperson

Art. 1998. The deposit of effects made by travelers in DIOSDADO M. PERALTA ROBERTO A. ABAD
hotels or inns shall also be regarded as Associate Justice Associate Justice
necessary.  The keepers of hotels or inns shall be
1avvphi1

responsible for them as depositaries, provided that JOSE CATRAL MENDOZA

notice was given to them, or to their employees, of Associate Justice
the effects brought by the guests and that, on the
ATTESTATION
part of the latter, they take the precautions which
said hotel-keepers or their substitutes advised
I attest that the conclusions in the above Decision
relative to the care and vigilance of their effects. had been reached in consultation before the case
was assigned to the writer of the opinion of the
Plainly, from the facts found by the lower courts, the
Court’s Division.
insured See deposited his vehicle for safekeeping
with petitioner, through the latter’s employee,
ANTONIO T. CARPIO
Justimbaste. In turn, Justimbaste issued a claim stub Associate Justice
to See. Thus, the contract of deposit was perfected
Chairperson, Second Division
from See’s delivery, when he handed over to
Justimbaste the keys to his vehicle, which CERTIFICATION
Justimbaste received with the obligation of safely
keeping and returning it. Ultimately, petitioner is Pursuant to Section 13, Article VIII of the Constitution
liable for the loss of See’s vehicle. and the Division Chairperson's Attestation, I certify
that the conclusions in the above Decision had been
Lastly, petitioner assails the lower courts’ award of reached in consultation before the case was assigned
attorney’s fees to respondent in the amount of to the writer of the opinion of the Court’s Division.
₱120,000.00. Petitioner claims that the award is not
substantiated by the evidence on record. RENATO C. CORONA
Chief Justice
We disagree.
Footnotes
While it is a sound policy not to set a premium on the
right to litigate,12 we find that respondent is entitled 1
 Penned by Associate Justice Remedios A. Salazar-
to reasonable attorney’s fees. Attorney’s fees may be Fernando, with Associate Justices Rosalinda
awarded when a party is compelled to litigate or Asuncion-Vicente and Enrico A. Lanzanas, concurring;
incur expenses to protect its interest, 13 or when the rollo, pp. 93-109.
court deems it just and equitable. 14 In this case,
petitioner refused to answer for the loss of See’s
2
 Penned by Pairing Judge Rommel O. Baybay; id. at
vehicle, which was deposited with it for safekeeping. 33-35.
This refusal constrained respondent, the insurer of
See, and subrogated to the latter’s right, to litigate
3
 Id. at 94-101.
and incur expenses. However, we reduce the award 4
 Id. at 35.
of ₱120,000.00 to ₱60,000.00 in view of the
simplicity of the issues involved in this case. 5
 Id. at 108.

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6
 Titan Construction Corporation v. Uni-Field
Enterprises, Inc., G.R. No. 153874, March 7, 2007,
517 SCRA 180, 186; Sigaya v. Mayuga, 504 Phil. 600,
611 (2005).

7
 See Child Learning Center, Inc. v. Tagorio, 512 Phil.
618, 623 (2005); Ilao-Quianay v. Mapile, 510 Phil.
736, 744-745 (2005).

8
 RULES OF COURT, Rule 18, Sec. 3:

SEC. 3. Notice of pre-trial.—The notice of pre-trial

shall be served on counsel, or on the party who has
no counsel. The counsel served with such notice is
charged with the duty of notifying the party
represented by him.

9
 Development Bank of the Phils. v. CA, 251 Phil. 390,
392-395 (1989). (Citations omitted.)

10
 See SSS v. Hon. Chaves, 483 Phil. 292, 302 (2004).

11
 Rollo, p. 105.

12
 Bank of the Philippine Islands v. Casa Montessori
International, G.R. Nos. 149454 & 149507, May 28,
2004, 430 SCRA 261, 296.

13
 CIVIL CODE, Art. 2208, par. 2.

14
 CIVIL CODE, Art. 2208, par. 11.

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